Travel Super Apps will be a reality soon!

Travel super apps are something that has been spoken about since super apps came into existence. Meituan, one of the first super apps in China, made an entry into hotel bookings competing directly with Ctrip, ultimately taking a lead on Hotel bookings from the latter. Such is the power of super apps. Rest of the world is still catching up.

Travel industry’s history is its biggest technical debt. This is evident from many new-age start-ups who are either there to simplify integrations (Mystifly, Duffel, etc.) or eat into travel’s lunch via remote tools (aka Zoom). As travel came to a stand-still, a new understanding dawned upon stakeholders that what they are doing isn’t going to be enough when things come back to normal.

If you look at travel from Theodore Levitt's Job To Be Done (JTBD) framework, you quickly realize that people don’t want to travel from a particular airline or live in a hotel, what they really want is to have a new experience, be a stranger in a new land, be free from their routine life and to rejuvenate. Somewhere along the line of travel’s long history, sellers forgot about what the customer actually wants and ended up solving for the supply they eventually became good at aggregating.

Another way to look at this is that a few years into when you start earning, you tend to start developing a certain taste around what your preferences are. The same thing is happening with travel, the most spending generation (GenX & Millennials) are the ones at the top of airlines & hotel loyalty programs providing them with add-ons that general OTAs or middlemen can’t provide. With loyal customers for OTAs further splitting between them and the end service provider, this translates to more ads spend to attract new first-time consumers. This coupled with low frequency has been the cornerstone of travel’s high CAC problem.

Thus, the sellers have to do more than just merely sell one component of a customer’s travel need. It’s already happening in China with Ctrip which has more than 60 travel products for its consumers while someone as big as booking.com has only 10, while the latter is making efforts to add more. Booking.com has announced a £100m investment in Manchester Tech hub for creating its cab aggregation business. Booking.com was the first to publicly announce a ‘connected trip’ vision which is something China was already doing. Marriott has taken it further by having a ‘connected room’ vision via its app for giving the ability to the users to control anything in the room with it.

Here is a story that goes in Indian travel circle of which I can’t guarantee the authenticity, this one is about Mr. Deep Kalra, founder of MakeMyTrip (MMT), circa 2007-08, wherein he saw that OTAs heavy dependence on Airline for revenue is not healthy and started a decade long move to have way more than just flights & hotels on the platform. This single insight fuels MMT even today wherein half of its revenue comes from the non-air related business like hotels, holidays, etc. Today you can see more than 15 products that they have for Indian travelers which is more than anyone else in India. In line with this but not an apple to apple comparison, JetBlue recently reported 7% of its total revenue came from selling non-airline based products & services. This is of significance because even airlines are thinking about revenue from areas outside of their core competence.

When I last wrote about Airbnb financials, I stumbled upon the fact that 40% of the searches that happened on the website were without location & dates. This got me thinking about how almost all travel websites in the world are geared towards a more frequent use case than leisure travel. While on one side the leisure traveller is a bit more price sensitive & has lower brand loyalty with aggregators; typical corporate travel is now moving into more transparency where corporates are asking their TMCs to have non-commissionable rates sourced & complete break-up for any and all charges. Anyone who does corporate travel knows that somewhere in the vicinity of 50-60% of their income comes from the supplier side than from the corporate.

Be it leisure travel or corporate, buyers & sellers are going to squeeze the intermediary.

Consumer facing travel companies will have to adopt the approach of a corp. travel company where they are able to deliver full-stack while a corp. travel company would have to be very transparent about charges like a consumer facing one. It’s time for both to learn from each other to strengthen each other.

Travel Super Apps are, therefore, inevitable in this decade!

Note:

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P.S: Thanks Disha for helping in editing this post.